Adverse action pinned down by the high court

The High Court of Australia has handed down its second significant decision on the interpretation of the adverse action provisions in the Fair Work Act 2009 (the Act). Readers will recall the High Court’s 2012 decision in the Board of Bendigo Regional Institute of Technical and Further Education v Barclay which provided employers with guidance on what must be established to defend a claim that adverse action had been taken against an employee for a prohibited reason. In summary, the Barclay case informed us that if the person who made the decision to sanction the aggrieved employee (such as a HR or operations manager) could provide cogent and credible evidence that no part of his or her decision involved a prohibited reason (such as participating in a lawful industrial activity) that would be sufficient to resist the employee’s claim.

Fast forward to the current case, which involved a dismissed BHP Coal employee alleging that he was unlawfully dismissed for engaging in industrial activity (in contravention of s. 346(b) of the Act). The employee was participating in a lawful protest at BHP Coal’s Saraji Mine, however, the infringing conduct in question related to a sign held and waved by the employee during the protest that read ‘No principles SCABS No guts’.

BHP Coal terminated the employee’s employment and justified its decision on the basis the word ‘scab’ on the employee’s sign was inappropriate, offensive, humiliating, harassing, intimidating, and in violation of BHP Coal’s workplace code of conduct (which required employees to show courtesy and respect to fellow employees).

Jessup J; a judge of the Federal Court, originally found that as the dismissal was directly related to the employee holding and waving the sign in the course of participating in lawful industrial activity, it must follow that BHP Coal’s decision to terminate the employee infringed section 346(b) of the Act. BHP Coal appealed the decision to the Full Bench of the Federal Court, which overturned the original findings of Jessup J on the basis that he did not follow the test applied in the Barclay case. The CFMEU (on behalf of the employee) appealed to the High Court of Australia.

High Court of Australia finding:

Unlike the unanimous decision in the Barclay case, the High Court was split 3 to 2 in its decision to reject the CFMEU’s appeal. The majority found that Jessup J had erred in finding that the decision to terminate the employee included his participation in industrial action.

They rejected the view that the employee’s industrial conduct and his termination were inextricably connected and BHP Coal’s decision to sanction the employee on conduct related grounds for promoting the reference to ‘SCAB’ to be lawful, notwithstanding the fact the term was promoted by the CFMEU during the action and is a term that is synonymous with industrial activity.

Take away message for employers:

The principles expressed in the Barclay case continue to guide employers in this area of law. This means that once the reasoning of the decision maker is accepted, no further inquiry of the surrounding circumstances shall be ventured upon by the Court.

Even where adverse action is taken against an employee in the context of complicated surrounding circumstances, such as during industrial activity or where the employee has made complaints, employers can proceed with sanctioning or terminating an employee for lawful reasons without the implication being made that the decision was inextricably linked to a protected workplace right.

It is now more important than ever for the decision maker (such as a HR or operations manager) to formulate (and record in writing) clear, cogent and lawful reasons for taking action against employees that affects their employment to ensure that their evidence is capable of being accepted and considered credible by a court.